Cogent Research: Fund Companies Need a Whole New Approach to Generation Y

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Investors under the age of 30 – born in 1982 or later – now comprise nearly 10% of all affluent investors in the United States. However, a new study shows that Gen Y lacks even a basic awareness of many of the leading mutual fund companies and the products they offer. Furthermore, based on how they gather and consume information, firms will need to dramatically alter how they engage with affluent Gen Y investors, especially as their wealth and numbers increase. These and other findings are included in the latest Investor Brandscape® report, recently released by Cogent Research. This annual report is based on a representative survey of over 4,000 investors within the United States with investable assets of at least $100,000.

“If you want to gain a quick appreciation for how different Gen Y is in the way it consumes information, simply ask a twenty-something how they get their news, stay current with their favorite programs, and learn about new products”

According to the study, affluent investors overall are familiar with an average of 10.6 mutual fund firms, while Gen Y investors are typically aware of half as many (5.3 brands). What’s more, they are far less likely than their older counterparts to recall recent advertising by any fund company. In contrast, Gen Y investors are more reliant on other modes of contact to connect with investment firms. In particular, these twenty-something investors are nine times more likely than investors over the age of 30 to develop relationships with asset managers via social media. Additionally, they are almost twice as likely to depend on advisors for provider recommendations reflecting their relative lack of experience with investing.

“If you want to gain a quick appreciation for how different Gen Y is in the way it consumes information, simply ask a twenty-something how they get their news, stay current with their favorite programs, and learn about new products,” said Meredith Lloyd Rice, Cogent Research Senior Project Director and author of the study. “The chances are high that TV commercials, newspapers, and radio won’t even be part of the equation.”

The Cogent Research findings clearly point to the fact that advertising via traditional outlets alone is not aligned with the way younger investors prefer to interact. As a result, firms will need to work harder to find better ways to engage with them. This could be via social media platforms, through the company website/blogs, or though targeted materials for financial advisors or DC retirement plans.

“Demonstrating a commitment to caring about Gen Y investors and engaging with them meaningfully in places and through media where they spend their time and energy makes sense,” says Lloyd Rice. “The companies that get there first and do it better will be leaps and bounds ahead of the competition.”

Percent of Investors Who Recall This Type of Contact With any Mutual Fund Provider in the Past Year
Type of Contact	Gen Y	Total Investors (excluding Gen Y)	Gap (+/-)
Advertising	57%	75%	-18
Company website	51%	49%	+2
Recommendation from advisor	42%	24%	+18
Company educational materials	40%	31%	+9
Company representative	41%	31%	+10
Email	43%	47%	-4
Social media	35%	4%	+31

Base: Affluent investors with $100K+ in investable assets
Source: Cogent Research Investor Brandscape®, December 2012

About Cogent Research

Cogent Research helps clients gain clarity, obtain perspective, and formulate direction on critical business issues. Founded in 1996, Cogent provides custom research, syndicated research products, and evidence-based consulting to leading organizations in the financial services, life sciences, and consumer goods industries. Through quality research, advanced analytics, and deep industry knowledge, Cogent Research delivers data-driven solutions and strategies that enable clients to better understand customers, define products, and shape market opportunities in order to increase revenues and grow the value of their products and brands.